Possible deferral with tax payments due to the coronavirus

Has your company suffered from payment problems due to the coronavirus? Setterwalls clarifies what the government’s crisis package means for the company’s ability to apply for deferred tax payments.

Update on 16 April 2020 – Deferral with tax payments due to COVID-19

Updated on 27 March 2020

The government’s crisis package as a result of the corona virus includes increased opportunities for companies to get a deferral with tax payments, so called temporary deferral. The rules are proposed to enter into force on 30 March 2020 with retroactive application from 1 January 2020.

1. What taxes are covered by the rules? The possibility of deferral applies to payment of social security charges, preliminary tax on wages and value added tax, which is reported monthly, quarterly or yearly (enter into force 6 April).
2. How long time can you get a temporary deferral? The company shall normally be granted a deferral period of three tax accounting periods for each tax type (for VAT reported quarterly, only one accounting period) for the accounting periods January – September 2020 and the deferral period may last for a maximum of one year.
3. Retroactive application: With retroactive application, companies that have paid tax for January – March 2020 can apply to have the tax refunded from the Swedish Tax Agency.
4. Conditions for temporary deferral: Deferral is granted only to companies that do not mismanage their finances or are otherwise rogue and do not have large tax liabilities.
5. How is already paid tax credited? Already paid taxes are repaid by crediting to the company’s tax account with the Swedish Tax Agency.

Current possibility of deferral

If the company has had temporary payment problems as a direct consequence of the corona virus, this could, according to the Swedish Tax Agency, be such exceptional reason (Sw. synnerligt skäl) that could form the basis to allow a deferral according to current rules.

1. What taxes are covered by the rules? The possibility for deferral is not limited to a certain type of tax or fee, or to any due date of such taxes or fees.
2. How long time can you get a deferral? The deferral period varies but is usu-ally set to two months. In certain cases, the deferral period may be longer, but not exceed four months unless the Swedish Tax Agency agrees due to special circumstances.
3. What amount can the company get deferred? Deferrals can be granted with an amount that is reasonable given the circumstances.
4. Conditions for deferral: Deferral is granted only if the taxpayer proves that payment can be made after the deferment period has expired and that the pay-ment problems are temporary.

Applying for deferred tax payments

Important to note is that the Swedish Tax Agency is restrictive in granting payment deferrals and it is therefore crucial that:

• You show in the application that the company fulfils the requirements
• The application is submitted so that the Swedish Tax Agency can process it before the tax has to be paid

As to the risk that you, as a representative of your company, may become liable to pay for the company’s unpaid taxes and fees, the Swedish Tax Agency has stated that, as a starting point, the agency will not apply for such representative responsibility (Sw. företrädaransvar) if the company has been granted temporary deferral of tax payments according to the government’s crisis package. This applies both to the deferral application before the ordinary tax due date and to retroactive deferment.

The application for deferral is filed through a special form to the Swedish Tax Agency or through the agency’s e-service. For advice on deferred payments of taxes and fees and representative liabilities, you are welcome to contact Setterwalls. We are also following the developments regarding the government’s crisis package and the increased possibility of deferral.

The content is a general description of informative nature only and is not legal advice to use as a basis for assessments in an individual case.